Bottom Line: Epwin looks a winner

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The Independent Online
AS USUAL Epwin's interims were just a little better than expected and the dividend continued its relentless, and well-covered, rise. Making plastic replacement windows was scarcely a recipe for success during the long recession, but Epwin maintained profits through the slump, investing heavily when it seemed foolish to do so. It is little wonder that now the market is picking up, so too are margins.

In the seasonally less profitable first half to July pre-tax profits increased 41 per cent to pounds 2.47m on an 18 per cent increase in sales to pounds 29m ( pounds 24.7m). Earnings per share rose a third to 7.54p. Last year's 9 per cent operating margin should be 10 per cent this time.

Forecast pre-tax profits of pounds 6.3m will also benefit from nine months of the company's first foray into North America, through Berlinex, a plastic extruder. Its second-quarter margins of 22 per cent, reflecting difficulties meeting strong demand, surprised analysts.

More acquisitions, along the lines of June's Permadoor buy, will take Epwin into more non- PVC but related areas, increasing the use of its existing distribution lines.

Having fallen in line with the sector since the early summer, the shares, up 5p to 310p, look pretty good value on a prospective p/e of 16.